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Blame Jim Johnson?

8:35 PM 06/28/2011
Mickey Kaus

This was a good end-of-paragraph from Walter Russell Mead:

… Reckless Endangerment gives the best available account of how the growing chaos in the mortgage and personal finance markets and the rampant bundling of dubious loans into exotically toxic securities plunged the world, and millions of American families, into the gravest financial crisis since World War Two. It is gripping reading as well, and its explanations are clear enough that readers without any background in finance will have no trouble following the plot.  The villains?  An unholy alliance between Wall Street, the Democratic establishment, community organizing groups like ACORN and La Raza, and politicians like Barney Frank, Nancy Pelosi and Henry Cisneros.  (Frank got a cushy job for a lover, Pelosi got a job and layoff protection for a son, Cisneros apparently got a license to mint money bilking Mexican-Americans of their life savings in cheesy housing developments.)  [E.A.]

But I’m not sure I agree with Mead’s argument — that the Fannie Mae story represents a powerful blame-placing, election-winning narrative for GOPs and Teepers in 2012. It might, if the connection with Obama were stronger.  But it’s not. (Yes, Obama picked Fannie villain James Johnson to run his VP search. That doesn’t seem like enough, though it reflected very bad judgment on Obama’s part.) ….

  • mikeshaner78

    I have added you to my blogroll at The Oak Park Republic (a libertarian leaning blog that advocates liberty and spreads the philosophy of individualism that is vital to a free society) and wondered if you would consider doing the same or a link exchange.

    Thanks,

    Mike
    http://oakparkrepublic.blogspot.com/

    • motionview

      That’s a very polite request Mike. Not gonna get far on the internets that way.

      Hey Mickey, I see they dropped you down below Ginnie Thomas on the DC front page. Keep vacationing, but you might want to recycle work something soon.

  • torispelling

    Now explain how Franklin Raines, chief fundraiser for the DNC and head of Barry’s VP Committee avoided jail after presiding over a $10bn fraud — only 10x the size of Enron’s faulty numbers.

  • msbatx

    You should really read more and post less, or perhaps not at all, at least for a while.

    http://www.mcclatchydc.com/2008/10/12/53802/private-sector-loans-not-fannie.html

    • Moptop

      Just so I can get this straight, since it isn’t clear from the link, what you are saying is that private lenders made the vast majority of the loans, and that they *didn’t* use these low standards because they knew that Fannie Mae would buy them immediately at a profit? Did your extensive research into this area include an entity known as the “secondary market”?

      Basically, by your accounts Fannie left billions of dollars on the table without good controls, but lenders were honor bound not to take advantage of it? Even though they might be accused of racism for not making the loans by the likes of one well known former community organizer who sued Bank of America and occupied a branch of their bank to try to force them to make these loans?

      It almost seems as if your story is carefully worded to dodge responsibility where it is clearly due. But I would love to hear your side of it.

  • kwo

    Almost forgot: check out Chuck Shumer’s career donations page at opensecrets.org: http://www.opensecrets.org/politicians/contrib.php?cycle=Career&type=I&cid=N00001093&newMem=N&recs=20

    See a trend? The only non-financial firm in Schumer’s top 10 is a New York law firm. Still think banks and wall street are Republican?

    Once again: What are Democrats doing to clean their own house? If you really care about preventing another financial meltdown, why aren’t you working to replace your own sell-outs?

  • rolandrock

    “Reckless Endangerment” does not try to link Barack Obama to the financial collapse. It doesn’t have to. The dots are all there for anyone to connect. Obama was there with ACORN in the 90s when they agitated and got Clinton to force banks to gut their lending standards. Obama was there in the Senate taking Fannie Mae money at an unprecedented rate when all that junk was dumped on the taxpayers via Fannie Mae in an almost exclusively Democrat campaign. Almost all the voices for restraint were Republican, including Bush 43. AcadeMediaWood has successfully owned the narrative until this book. Game Over.

  • Quayle

    I’m sorry to say it, but we’ve seen the enemy and the enemy is us average citizen.

    The one constant in any economic or financial bubble is the over-exuberance of the masses.

    The tech bubble was inflated by the aggregate excessive demand of each 401k holder that wanted to get in on the dot-com action. Wall Street just obliged (as they always do) by selling us more tech stocks and finding them wherever they could get an executive team with plausible CVs, even if the companies didn’t have a clue how they were ever going to be profitable. (If we the consumer didn’t care, why should Wall Street care?)

    The housing bubble was inflated by the aggregate demand of each American home buyer who individually believed that houses can only go up in value, and that they deserved that 4000 square foot mini-mansion after their long hours at home. Wall Street just obliged (as they always do), and figured out ways to draw more money to our demand for loans, by securitization which allowed Americans to, in essence, even borrow from German net lenders.

    The fact is that no government, and especially not a democratic government, can help a populace that is individually and collectively lacking in proper virtues and moral strength.

    Sure Greenspan and Bernanke poured gasoline on the fires, but they would have been replaced if they didn’t. As long as the public wanted a free ride to wealth, anyone that promises it will be exalted, and anyone that hinders it will be shoved aside.

    • Quayle

      “after their long hours at home”.. Should read “at work.”

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  • jvanke

    Just a sec, here. This is Mead, whose bias is to not blame traditional Republican constituencies. And lo and behold, we can identify two of them to share the blame: (1) the real estate industry including the local mortgage lenders; (2) the mortgage-interest deduction on Federal taxes, which exceeds standard deductions mostly only for above-median incomes, which means disproportionately Republicans, but not dramatically disproportionately.

    • Gina

      2) Is not correct. It’s always better to itemize if you have mortgage interest than to claim the standard deduction.

      • Dredmalice

        False. Quite often the standardized deduction is greater than total itemized deductions. Two common situations are that your financed amount and low interest rate result in a reduced finance charge, or that you are near the end of your mortgage when the principal payment vastly outweighs the interest payment. (The interest payment is much higher in the beginning of a mortgage, and steadily decreases. The reverse is true of the principal). The first situation occurs most often with lower economic classes, who buy smaller houses, which is (one reason)why the mortgage interest deduction favors wealthier people.

  • Dredmalice

    Takeaway #1 – Sorry, but the GOP will never get past: Bush was president, congress was mostly Republican, Banks are Republican, the Fed was Republican, Real Estate Agents are Republican, etc, etc. In the eyes of America, anyway. And La Raza? Really? (It was an ALLIANCE! They didn’t come to make friends! -ed) Well, done, that.

    Takeaway #2 – Kaus pours over his comments, and responds passive-aggresively with hs next posts.

    • stephenkaus

      Glad some one else is on Mickey’s case here. I am going to take a few days off.

      • Dredmalice

        OK but come back refreshed

    • kwo

      Let’s take that one at a time…

      1. Bush WAS President. Now we have a different President who claims to have solved the problems that led to the financial meltdown. We’ll see whether voters believe him.

      2. Yup, congress was mostly Republican. And the Tea Party is working hard to chase the RINO’s that allowed Democrats to undermine the financial system. They started with Bob Bennett last cycle, they’re now looking to knock out Hatch, Lugar, and possibly Grassley. Question: What are Democrats doing about Frank, Pelosi, Reid, and Baucus?

      3. Banks are Republican? No. Look up Bank of America, Citigroup, Goldman, etc. at opensecrets.org. In 2010, some of the big financial institutions leaned Republican, some leaned Democrat, but all were heavily pro-incumbent. Once again: What are Democrats doing about their incumbents?

      4. The Fed is and has always been non-partisan. Bernanke was re-nominated by Pres. Obama in 2010, Greenspan was nominated by Pres. Clinton twice.

      5. How can you possibly know which party real estate agents belong to?

      Takeway — you’re making stuff up to satisfy your own worldview.

      • Dredmalice

        Already answered all your points in original post : “In the eyes of America”. Don’t like it? Well I don’t like that the corporate media is wrongly considered ‘liberal’. I guess we’ll both have to tough it out.

      • stephenkaus

        “And the Tea Party is working hard to chase the RINO’s that allowed Democrats to undermine the financial system.” Plenty of blame to go around, but this is not even close to an accurate description of Dick Armey, the Gramms and their ilk.

        Talk about making up facts to fit a world view!

    • Apolitical Blues

      re: “Bank are Republican”

      The largest subprime lender was Countrywide and I think if you review the Friends of Mozilo list you won’t find many Republicans on it.

      Actually I think the banks are more opportunistic than anything. They will exploit whoever they can regardless of party affiliation. Since the Dems are more predisposed to “everyone should own a home” philosophy they are naturally more vulnerable to being taken advantage of by Wall Street.

    • motionview

      The Republicans controlled the House from Jan 1995 – Jan 2007. During that period, according to the Bureau of Labor Statistics, 20.5 Million new jobs were created. The Democrats took control of the House and Senate in January 2007, and by January 2011 7 million jobs were lost. Since the Republicans took back over in January 2011, 1M new jobs have been created.

      This is the Progressive’s recession, and if Obama is re-elected, it will become the Progressive Depression.

      BLS CES 0001, Total Non Farm Employment

      • Dredmalice

        Nope, Bush recession. And what a weird time period to cherry pick. Could it be because most of the jobs were created in the half of that time period that Clinton was president? (ie – how many jobs were created from 2001 to 2007?) What’s that? Yes it is? Ok thought so.

        • motionview

          Just say Bush recession, that makes it true. I picked those time periods because that is when the House changed hands.
          From the BLS numbers
          Jan 2011 130328 total non farm employment
          May 2011 131043(P)
          That’s 700K jobs by the beginning of May; I extrapolated and rounded up slightly.

          This recession was caused by a correct market anticipation of Progressive rule, and the only cure is a return to fiscal responsibility.

          • Dredmalice

            Wow, you are really struggling to stay above water here. Ok, let’s take them one by one. It’s the (they are the ) Bush recession(s) because Bush started it(them). Simple enough. Anticipation of progressive rule? That is one of the weirdest things I’ve ever heard. So the recession that started in 2007 was because of anticipation that Obama would be elected president almost a year later? That’s some anticipations you got there. SO I suppose the 2001 recession was due to anticipation that Bush would be re-elected? Or the Senate would change hands twice in as many years?

            Oh and you ‘extrapolated’ AND ’rounded up’? SO you mean you changed it completely to suit your argument, even though it wasn’t true? As evidenced by your own source which you yourself posted? Ok that’s what I thought.

      • Dredmalice

        Oh, and by the way, your claim “Since the Republicans took back over in January 2011, 1M new jobs have been created” is disproved by your own source. By your own source. (there should be a name for that – ed) There is, it is called ‘Kausing yourself in the foot’